How to Get Clients to Follow Your Advice

OM: It's important to meet with a couple together—and, if they have any bad will or power imbalance, separately as well—to revisit their goals and assess whether they're positioned to meet them.

I sometimes ask a couple to agree on the time frame for their short-, medium- and long-term goals, then list their own personal, couples and family goals several times to see which ones they can really trust. They look at each other's final goals and try to harmonize the two lists. If clients are spending money more quickly than you thought they would, this is a good exercise to see how aligned they are.

Also, you need to take time to bond with them and empathize with what they want to do with their money. It doesn't help just to say, "Listen, you really can't afford to do this." They won't listen to you, and if either one of them is a spender, that person will feel very rebellious. But if you really bond with what they want and see what the underlying need is—do they want to support their grandkid, for instance?—then you can try to suggest other scenarios. Could they support him in a more affordable way than buying him a car?

After sufficient listening and patience, you can brainstorm with them about what they will do if they don't have adequate funds to meet all their goals. I would highly recommend my friend Dorian Mintzer and Roberta Taylor's book, "The Couple's Retirement Puzzle: 10 Must-Have Conversations for Transitioning to the Second Half of Life."

KB: I love what Olivia said, especially in terms of digging into what clients care about. In a negotiation class I took years ago, the biggest thing that stuck with me is the difference between "interests" and "positions." For example, a position might be "I want to pay for my kids' college." But there are interests driving this position, such as wanting to support the children's future. Once you figure out what the client's interests are, you can potentially find a new position that will work just as well or maybe even better without putting them in financial peril.

That said, in many of these situations you can get away without as much conversation by simply reframing.

Let's say these clients have $1 million to draw income from, and they'll need $800,000 to support their lifetime income needs. The remaining $200,000 becomes their discretionary fund. So if the wedding for their kids goes from $10,000 to $20,000, instead of them thinking, "Oh, what's another $10,000 against $1 million?" they're now comparing that extra $10,000 against $200,000, which is the only discretionary money they'll have for the rest of their lives. Now they'll be more careful.

Whether you actually create a separate account, which is what Minnesota-based financial advisor Jonathan Guyton does, or you just describe it to them as a separate pool of money, this approach tends to have a really nice impact.

It also gives them choices. If they start to run down that $200,000 too quickly, you can say, "No problem. As we've discussed, $800,000 should be able to provide you about $2,500 a month to cover your expenses. If you'd like to move some of that $800,000 to your discretionary fund, we can adjust the $2,500 a month down. It's your choice."

By framing it with this separate $200,000, as Guyton suggests, it puts the decision in the clients' hands. "Over the course of your life you can make whatever decisions you want, whether it's a vacation, a new car that you hadn't planned for or whatever else. You can use your money for anything." This tends to be a nice, practical approach to curb clients' overspending in retirement.

Read the entire series of scenarios addressed by Olivia Mellan and Kol Birke.